“Uncertain” has been the operative word to describe everything from global geopolitics, Guam’s tourism economy, and now modern private investment markets, according to panelists at Tuesday’s meeting of the Rotary Club of Tumon.
Jason Miyashita, past president of Rotary Club of Tumon and managing director of Asia Pacific Group of Raymond James, said investment portfolios have changed from the typical 60% stocks and 40% bonds spread.
“It’s more of a 50% stocks, 20% to 30% bonds, and 20% to 30% alternative investments. So, this is changing the dynamic of investment portfolios,” he said.
Alternative investments are financial assets that fall outside of the conventional investment categories of stocks, bonds, and cash, which include things like private equity, real estate, or tangible assets.
Investment portfolios are becoming more accessible, according to Miyashita. In the past, a person would need at least $10 million, but now the amount has been brought down to as low as $15,000, he said.
Private equity is becoming increasingly democratized, meaning more people are investing now than ever before.
According to the Chartered Financial Analyst Institute, private market assets under management totaled $13.1 trillion in June 2023, a 20% increase per year since 2018.
Travis Klein, a principal at Blackstone Inc., one of the largest asset managers in the U.S., said it’s a trend best highlighted around 2022.
That year, inflation had risen to record heights, stocks and bonds were down, and even gold prices saw a drop, according to Klein.
“So if you think about those ‘safe haven assets’…not being so safe these days in this kind of market environment,” he said. “That’s really where private equity can come in.”
Michael Manning, senior vice president at Brookfield Oaktree Wealth Solutions, said there’s more out there to invest in than publicly traded stocks and bonds.
Around 80% of the world’s companies are private, according to Manning.
“So, you’re really missing out on a giant portion of investment opportunity,” he said.
Some companies that are part of that 80% are Space X and OpenAI, Manning said.
“The reason we like private investing is because these companies, these high-quality assets or companies are going to trade purely on fundamentals and long terms, but they’re generating cash flow over time,” he said. “They’re going to make you a bunch, a lot of money.”
Compared to publicly traded stocks, which have much more restrictions on how an individual can invest, those in private equity have more influence on development opportunities into the companies they’re investing in, Klein said.
“One of the best examples that we use in Blackstone is a data center company that we actually took private in 2021,” Klein said. “We’ve grown that business 14 times…It’s probably going to go down in the history of Blackstone [as] the best investment we’ve ever made in our history.”